Salary Deduction for Immediate Resignation in the Philippines

(Everything you need to know, as of 2025)

1. Legal Foundations

Key Instrument	Core Provision (old & renumbered article nos.)	Relevance to Salary Deductions
Labor Code of the Philippines	Resignation notice – Art. 300 (former Art. 285) Just-cause immediate resignation – Art. 300(3) Wage-deduction rule – Art. 303 (former Art. 113)	Sets the 30-day notice requirement and lists the only circumstances in which an employer may lawfully deduct wages.
Civil Code	Arts. 1159 & 1170	Allows damages for breach of an obligation (e.g., failing to serve notice).
DOLE Labor Advisory No. 06-20 (Final Pay & COE)	Final pay must be released within 30 calendar days from date of resignation/termination, “unless delays are attributable to the employee.”
Handbook on Workers’ Statutory Monetary Benefits (DOLE, 2023 ed.)	Clarifies that an employee who skips the 30-day notice may be held liable for damages or charged pay in lieu of notice only if this is (a) written in a contract, CBA, or policy and (b) consistent with Art. 303.

2. Resignation Without 30-Day Notice

2.1 When “Immediate” Resignation Is Allowed (No Liability)

Under Art. 300 (last paragraph) an employee may quit without notice or penalty for any of these just causes:

Serious insult by the employer or representative
Inhuman or unbearable treatment
Commission of a crime against the employee, their family, or representatives
Other causes analogously serious (e.g., imminent danger to life/health)

Result: no damages, no salary deduction, final pay must still be released within 30 days.

2.2 When Immediate Resignation Lacks Just Cause

If an employee simply walks out or gives < 30 days’ notice without any just cause, they breach Art. 300 & may be liable for damages. Two routes are open to the employer:

Option	Legal Basis	Practical Notes
Sue for damages (civil action or money claim before the NLRC)	Civil Code, Labor Code Art. 300	Employer must prove actual loss (e.g., cost of replacement, disruptions).
Compensate (“offset”) the unserved notice against final pay	Allowed only if it satisfies all conditions of Art. 303: 1. Express written authorization by the worker or 2. Collective Bargaining Agreement / company policy filed with DOLE and 3. Deduction is reasonable and equitable.	Absent those, withholding or deducting wages is illegal deduction (subject to penalties under Art. 305, formerly Art. 116).

Rule of thumb: No written agreement or policy on “pay in lieu of notice” = no unilateral salary deduction.

3. Limits & Mechanics of Lawful Salary Deductions

Cap on Amount. There is no specific percentage cap in the Labor Code for damages or notice pay, but DOLE repeatedly reminds employers that the deduction must not reduce the employee’s take-home pay below the statutory minimum wage for the final period.
Sequence of Off-Sets. Apply mandatory deductions first (withholding tax, SSS, PhilHealth, Pag-IBIG loans), then authorized offsets (cash advances, property accountabilities), and only then, if still allowed, the “pay in lieu of notice.”
Documentation.
- A deduction worksheet signed by the employee or union representative;
- Copy of the policy or CBA provision;
- Proof of computation (e.g., daily rate × unserved days).
Penalties for Illegal Deduction. Fine of ₱ 30,000-100,000 and/or imprisonment (Art. 303 jo. Art. 305); moral and exemplary damages and attorney’s fees may also be awarded in illegal-deduction cases.

4. Final Pay After Immediate Resignation

Component	Always Due?	Common Deductibles/Liens
Unpaid wages up to last day actually worked	Yes	Mandatory taxes, SSS/Pag-IBIG/PhilHealth loan amortization
Pro-rated 13th-Month Pay	Yes	Same as above
Unused & convertible Service Incentive Leave	Yes	Same as above
Separation pay	Only if provided by CBA/company policy or if resignation is actually a constructive dismissal	Same as above
Deposits or bonds (e.g., for tools, cash register)	Must be returned unless validly forfeited following Art. 303 & clear policy	Replacement cost of lost/damaged property, but only after due process

The employer bears the burden of proving each deduction’s legality.

5. Jurisprudence Snapshot

Case	G.R. No.	Key Take-Away
Cosme v. NLRC (1998)	117732	Failure to serve 30-day notice is a breach, but employer must file a claim; cannot just withhold wages.
Digital Telecommunications v. Soriano (2017)	166039	A company-policy clause allowing deduction for unserved notice is valid if the employee agreed to it and the employer observes Art. 303 safeguards.
Jarnos v. Rolltech Inc. (2019)	200143	Withholding final pay for equipment loss is illegal because the deduction was not covered by a written authorization nor proved.
Palermo Services v. Perez (2024)	235516	Reiterated that damages for immediate resignation are compensatory, not punitive; deduction cannot exceed actual proven loss.

(All decisions are Supreme Court unless otherwise stated.)

6. Best-Practice Checklist for Employers

Policy Clarity
- Include a “pay in lieu of notice” clause in employment contracts or CBA.
- File the policy with DOLE to avoid Art. 303 issues.
Written Authorization
- Have resigning employees sign a quitclaim & waiver expressly acknowledging the deduction amount.
Compute Transparently
- Use employee’s daily basic wage × days of unserved notice.
- Attach the computation sheet to the quitclaim.
Release Final Pay Promptly
- Even when applying lawful deductions, release the balance within 30 days (Labor Advisory 06-20).
Document Everything
- Notices, emails, acknowledgment receipts, inventory reports, and any evidence of loss.

7. Employee Tips

Review your contract & CBA before resigning; look for a “liquidated damages” or “notice pay” clause.
Negotiate: Employers often waive the notice requirement when workload permits.
Demand a breakdown of any deductions. You have the right to file a money claim before the NLRC within three (3) years.
Just-cause? Gather proof (e.g., medical reports, harassment emails) if you rely on Art. 300 grounds.
Quitclaim caveat: Signing a quitclaim bars future claims unless you prove vitiated consent or manifest unfairness.

8. Frequently Asked Questions

Can my employer forfeit my 13th-month pay if I resign without notice? No. Statutory benefits cannot be forfeited; only lawful deductions may be offset.
Is the 30-day rule counted in calendar or working days? Calendar days, unless your contract or CBA states otherwise.
Can the employer charge “training fees” if I leave immediately? Only if a valid Training Agreement exists and complies with TESDA/POEA rules; otherwise, such deduction is illegal.
What if I resigned by text/email—does it start the 30-day count? Yes, if the employer actually receives it; best practice is to send a signed letter and ask for acknowledgment.

9. Practical Scenarios

Scenario	Lawful Deduction?	Why
Employee with no just cause gives 0-day notice; contract has clause: “If notice not served, employee authorizes deduction of remaining salary equivalent to notice.”	Yes, provided the clause was freely agreed to and deduction is shown on a computation sheet.	Meets Art. 303 criteria.
Employee walks out; employer seizes last month’s wages & 13th-month pay without written authority.	No.	Violates Art. 303 and jurisprudence. File money claim.
Employee refuses to return company laptop worth ₱ 40k; last pay is ₱ 50k. Policy allows set-off for unreturned property.	Yes, up to ₱ 40k, after inventory report & demand letter. Remaining ₱ 10k must be paid.

10. Key Take-Aways

Immediate resignation is risk-free only when anchored on a just cause.
Absent such cause, the employer’s remedy is damages—often implemented as “pay in lieu of notice”—but only through deductions that strictly follow Art. 303.
Unilateral withholding or over-deduction is illegal and exposes the employer to double liability: refund plus statutory penalties.
Final pay (net of lawful deductions) must reach the employee within 30 days.

This article is for general information only and does not constitute legal advice. For specific cases, consult a Philippine labor-law practitioner or the nearest DOLE Regional Office.